Jayone Foods v. Aekyung Industrial Co. Ltd. ( 2019 )

Filed 1/22/19
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION SEVEN
JAYONE FOODS, INC., B282674
Cross-Complainant and (Los Angeles County
Appellant, Super. Ct. No. BC569190)
v.
AEKYUNG INDUSTRIAL CO. LTD.,
Cross-Defendant and
Respondent.
APPEAL from an order of the Superior Court of Los
Angeles County, Elizabeth Allen White, Judge. Reversed.
Murchison & Cumming, Edmund G. Farrell, and Eric P.
Weiss for Cross-Complainant and Appellant.
Covington & Burling, Nathan E. Shafroth, and Ashley M.
Simonsen for Cross-Defendant and Respondent.
_______________________
This appeal arises out of a wrongful death suit brought by
the family of Sunja An against a number of business entities,
alleging that a humidifier cleaning agent manufactured in Korea
and sold in California caused An’s death. One of the defendants
named in the action is appellant Jayone Foods, Inc. (Jayone), a
California importer and distributor of Korean consumer products
that sold the cleaning agent to a Los Angeles retail store where
An allegedly purchased the product. Jayone in turn filed a
cross-complaint against respondent Aekyung Industrial Co. Ltd.
(Aekyung), a Korean manufacturer and distributor of personal
care and household products that sold the cleaning agent to
Jayone. The trial court granted Aekyung’s motion to quash
service of summons for lack of personal jurisdiction. We reverse.
FACTUAL BACKGROUND AND PROCEDURAL HISTORY
I. The Complaint and Cross-Complaint
On January 13, 2015, the adult children of decedent Sunja
An (Plaintiffs) filed a wrongful death and survivor action against
SK Chemicals Co., Ltd., SK Chemical America, Inc., SK U.S.A.,
Inc., and Kim’s Home Center, Inc. Plaintiffs later amended the
complaint to name additional business entities as defendants,
including Aekyung, Aekyung S.T. Co., Ltd., Jayone, and Jayone
Homeware, Inc. According to the second amended complaint, in
2005, An began to maintain and clean her humidifier with the
Aekyung Humidifier Cleaning Agent manufactured by the SK
Chemical defendants and distributed by the Aekyung defendants.
Between 2006 and 2012, An purchased the Aekyung Humidifier
Cleaning Agent from Kim’s Home Center in Los Angeles. In
2008, An developed a cough for which she sought medical
attention. The cough worsened over time, and An subsequently
2
developed difficulty breathing. An was diagnosed with idiopathic
pulmonary fibrosis in 2012, and died from the disease on
February 11, 2013. Plaintiffs allege that An’s death was caused
by her long-term and frequent use of the Aekyung Humidifier
Cleaning Agent, and on that basis, assert claims for products
liability and negligence.1
On December 2, 2015, Jayone filed a cross-complaint
against Aekyung (a Korean corporation), Kim’s Home Center
(a California corporation), and Woosung America Corporation
(Woosung) (a California corporation).2 The cross-complaint
alleges claims for equitable indemnity, contribution, and
declaratory relief with respect to any judgment rendered against
Jayone and in favor of Plaintiffs.
II. Aekyung’s Motion to Quash Service of Summons
On July 25, 2016, Aekyung specially appeared in the action
and filed a motion to quash service of summons on Jayone’s cross-
complaint for lack of personal jurisdiction. The motion was
supported by various declarations and exhibits, including
declarations from Yeun Kyu Lee (Lee), Aekyung’s Vice President
responsible for overseeing domestic and international sales. As
described by Lee, Aekyung is a manufacturer and distributor of
1 Plaintiffs never served the second amended complaint on
the Aekyung defendants.
2 Jayone also named SK Chemicals Co., Ltd. (a Korean
corporation) as a defendant in its cross-complaint, but later
dismissed its cross-complaint as to this defendant without
prejudice.
3
household and personal care products.3 The company is
incorporated in the Republic of South Korea with its principal
place of business in Seoul, Korea. Aekyung primarily targets the
Korean domestic market for the sale of its products, and has
never had a specific sales or business unit targeting any United
States market. Aekyung has never been qualified to do business
in California, has never paid taxes in California, and has never
maintained any offices, agents, employees, facilities, property, or
bank accounts in California. Additionally, Aekyung has never
advertised any of its products in California, nor has it controlled
the advertising or marketing activities of any distributor or
retailer of its products in California. Aekyung has never created
any distribution system for the purpose of bringing its products
into California, or employed any sales agent in California for the
distribution of its products in the State.
From 2002 to 2011, Aekyung distributed a humidifier
cleaning agent that was manufactured exclusively for Aekyung in
Korea by SK Chemicals Co., Ltd., a Korean corporation. The
name of the product was the Aekyung Humidifier Mate, and the
product bore labels written solely in the Korean language.
Aekyung never advertised the Humidifier Mate outside of Korea,
or targeted any specific market in the United States for the sale
of the product. Aekyung primarily sold the Humidifier Mate to
third-party distributors in Korea. Aekyung was aware that
some of its Korean distributors intended to sell the product to
importers in other countries, including the United States, and
that Woosung was one possible United States importer. Aekyung
3 Between 2005 and 2011, Aekyung’s total annual sales
ranged from $269 million to $345 million.
4
did not know, however, whether any of its Korean distributors in
fact exported the Humidifier Mate to the United States, or
whether any sales of the product to consumers in the United
States resulted from any such exports.
In April 2006, Jayone contacted Aekyung to place an order
for the import of 200 boxes of the Aekyung Humidifier Mate,
along with a number of other Aekyung products. Each box
contained 12 bottles of the humidifier cleaning agent. The cost of
the Humidifier Mate was $3,720 and the total cost of the April
2006 order was $24,916. Aekyung shipped the goods to a United
States port of entry in Los Angeles, and Jayone assumed control
of the shipment upon its arrival in the United States. In January
2007, Jayone again contacted Aekyung to order 100 more boxes of
the Humidifier Mate, along with one other product. The total
cost of the January 2007 order was $2,511, and $1,860 of that
cost was for the Humidifier Mate. Aekyung delivered the second
set of goods to a shipping company in Busan, Korea, and Jayone
then arranged for the goods to be shipped to a port of entry in
Los Angeles. Aekyung had no control over the final destination
of the second shipment after it was delivered to Busan. At the
time it filled Jayone’s orders, Aekyung was aware that Jayone
distributed goods throughout the United States, but did not know
if either of those orders resulted in the sale of the Humidifier
Mate to any consumers in California. Apart from the two sales
made to Jayone in 2006 and 2007, Aekyung never directly sold
the Humidifier Mate to any distributor or retailer in California or
elsewhere in the United States.
5
III. Jayone’s Opposition to the Motion to Quash
Jayone filed an opposition to the motion to quash. Jayone
argued that Aekyung was subject to specific personal jurisdiction
in California because (1) the company purposefully availed itself
of the privilege of conducting business in the State, (2) the claims
in Plaintiffs’ action arose out of or related to Aekyung’s California
contacts, and (3) the exercise of jurisdiction over Aekyung would
be reasonable.4
The opposition was supported by a declaration from Ik Tae
Kim (Kim), the Senior Director of Jayone. According to Kim,
Jayone is based in Paramount, California, and is a distributor of
Korean consumer products. Between June and November 2005,
Jayone purchased a variety of Aekyung products directly from
Woosung, including 20 boxes of the Aekyung Humidifier Mate.
Kim was later contacted by Sung Hoe (Milky) Kim, the Assistant
Manager for Aekyung’s Overseas Business Department, to
discuss establishing a business relationship under which Jayone
would serve as an importer and distributor of Aekyung’s
consumer products. As a result of this contact, Jayone began
purchasing products directly from Aekyung. Aekyung sold and
shipped its products to Jayone in California on several occasions
between 2006 and 2010. The products were delivered by ship
from Busan, Korea to the Ports of Los Angeles and Long Beach in
California. During this period, representatives from Jayone and
Aekyung also communicated with each other on a regular basis
by telephone, email, and purchase orders.
4 Jayone also asserted that Aekyung was subject to general
jurisdiction in California, but later abandoned that argument
and does not raise it on appeal.
6
As part of the parties’ new business relationship, Aekyung
representatives traveled to California and visited Jayone’s
facility in Paramount in September 2006. During this visit, Kim
personally met with the Aekyung representatives, including
Milky Kim, to discuss Aekyung’s desire to sell more of its
products to Jayone. A Jayone representative also drove the
Aekyung representatives to at least one retail store in Los
Angeles to allow the Aekyung representatives to inspect the
store, observe how Aekyung products were being displayed,
and observe the store’s clientele.
Jayone purchased a total of 300 boxes of the Aekyung
Humidifier Mate directly from Aekyung between April 2006 and
January 2007. The products were delivered to Jayone through
the Port of Los Angeles. Between 2005 and 2007, Jayone sold
the Aekyung Humidifier Mate to retail stores in the Los Angeles
area that specialize in selling Korean-made consumer products,
including Kim’s Home Center. Jayone sold a total of 55 boxes of
the Aekyung Humidifier Mate to Kim’s Home Center between
December 2006 and November 2007. The Aekyung Humidifier
Mate that Jayone sold to Kim’s Home Center included both
product it had purchased directly from Woosung and product it
had purchased directly from Aekyung.
Jayone also supported its opposition with testimony and
exhibits from Lee’s deposition. Lee admitted that, when Aekyung
sold its products to Jayone, Aekyung was aware that Jayone was
based in California. The invoices that Aekyung prepared for the
sale of the Humidifier Mate to Jayone listed Jayone’s business
address in Paramount, California, and identified the final
destination for the goods as Los Angeles. Lee also testified that,
between 2005 and 2012, Aekyung directly sold its products (not
7
including the Humidifier Mate) to 10 distributors in the United
States, at least five of which were located in California. During
that period, Aekyung generated $3.07 million in sales revenue for
products that it sold to its United States distributors, and at least
$1.78 million in revenue for products that it sold to United States
distributors with a California shipping address.
IV. The Order Granting the Motion to Quash
On March 17, 2017, the trial court granted Aekyung’s
motion to quash service of summons and dismissed Jayone’s
cross-complaint as to Aekyung. The court concluded that Jayone
had failed to meet its burden of showing that there was a
sufficient basis to exercise either general or specific personal
jurisdiction over Aekyung.
With respect to specific jurisdiction, the trial court found
that Jayone had demonstrated that Aekyung purposefully
availed itself of the benefits of doing business in California
because Aekyung “direct[ed] economic activity” to the State by
“shipping units of [the] Aekyung Humidifier Mate to Jayone
Foods in California.” The court found, however, that Jayone had
not shown that the controversy arose out of or related to
Aekyung’s California contacts because Jayone failed to establish
that Sunja An “purchased and was exposed to the bottles which
were shipped by Aekyung . . . to Jayone Foods in April 2006 and
January 2007.” The court noted that “[i]t may be that [An]
purchased bottles which were not from those April 2006 and/or
January 2007 shipments, but instead were from other shipments
into California as to which Aekyung cannot be said to have
purposefully availed itself of the forum benefits.” The court also
noted that, while Plaintiffs’ complaint alleged that An started
using the Aekyung Humidifier Agent in 2005, and used it on a
8
regular basis from 2006 through 2012, “the only evidence of
purposeful availment pertains to two shipments – April 2006 and
January 2007 – over that six year period.” Following the trial
court’s ruling, Jayone filed a timely notice of appeal.
DISCUSSION
On appeal, Jayone challenges the trial court’s order
granting Aekyung’s motion to quash service of summons on the
cross-complaint. Jayone contends the motion should have been
denied because it met its burden of demonstrating that Aekyung
was subject to specific jurisdiction in California, and Aekyung
failed to show that the exercise of jurisdiction was unreasonable.5
I. Governing Legal Principles
“California courts may exercise personal jurisdiction on any
basis consistent with the Constitution of California and the
United States. (Code Civ. Proc., § 410.10.) The exercise of
jurisdiction over a nonresident defendant comports with these
Constitutions ‘if the defendant has such minimum contacts
with the state that the assertion of jurisdiction does not violate
“‘traditional notions of fair play and substantial justice.’”’
5 In granting the motion to quash, the trial court sustained
a number of Aekyung’s objections to the evidence submitted by
Jayone in support of its opposition. Jayone does not challenge
any of the trial court’s evidentiary rulings on appeal. Thus, any
claim of error in that regard has been forfeited, and we do not
consider any of the evidence that was excluded by the trial court.
(Salas v. Department of Transportation (2011) 198 Cal.App.4th
1058, 1074 [appellant’s failure to properly challenge the trial
court’s evidentiary rulings forfeits the issue on appeal; Jessen v.
Mentor Corp. (2008) 158 Cal.App.4th 1480, 1492, fn. 14 [same].)
9
[Citation.]” (Pavlovich v. Superior Court (2002) 29 Cal.4th 262,
268 (Pavlovich).) “[T]he minimum contacts test asks ‘whether the
“quality and nature” of the defendant’s activity is such that it is
“reasonable” and “fair” to require him to conduct his defense in
that State.’ [Citation.] The test ‘is not susceptible of mechanical
application; rather, the facts of each case must be weighed to
determine whether the requisite “affiliating circumstances” are
present.’ [Citation.]” (Snowney v. Harrah’s Entertainment, Inc.
(2005) 35 Cal.4th 1054, 1061 (Snowney).)
“Personal jurisdiction may be either general or specific. A
nonresident defendant may be subject to the general jurisdiction
of the forum if his or her contacts in the forum state are
‘substantial . . . continuous and systematic.’ [Citations.]” (Vons
Companies, Inc. v. Seabest Foods, Inc. (1996) 14 Cal.4th 434, 445
(Vons).) “If the nonresident defendant does not have substantial
and systematic contacts in the forum sufficient to establish
general jurisdiction, he or she still may be subject to the specific
jurisdiction of the forum. . . .” (Id. at p. 446.) “When determining
whether specific jurisdiction exists, courts consider the
‘“relationship among the defendant, the forum, and the
litigation.”’ [Citation.] A court may exercise specific jurisdiction
over a nonresident defendant only if: (1) ‘the defendant has
purposefully availed himself or herself of forum benefits’
[citation]; (2) ‘the “controversy is related to or ‘arises out of’ [the]
defendant’s contacts with the forum”’ [citation]; and (3) ‘“the
assertion of personal jurisdiction would comport with ‘fair play
and substantial justice’”’ [citation].” (Pavlovich, supra, 29
Cal.4th at p. 269.)
“‘When a defendant moves to quash service of process’ [on
jurisdictional grounds], ‘the plaintiff has the initial burden of
10
demonstrating facts justifying the exercise of jurisdiction.’
[Citation.] ‘If the plaintiff meets this initial burden, then the
defendant has the burden of demonstrating “that the exercise of
jurisdiction would be unreasonable.”’ [Citation.]” (Snowney,
supra, 35 Cal.4th at p. 1062.) “When there is conflicting
evidence, the trial court’s factual determinations are not
disturbed on appeal if supported by substantial evidence.
[Citation.] When no conflict in the evidence exists, however, the
question of jurisdiction is purely one of law and the reviewing
court engages in an independent review of the record. [Citation.]”
(Vons, supra, 14 Cal.4th at p. 449.) Here, because Jayone does
not contend that Aekyung is subject to California’s general
jurisdiction, we need only consider whether specific jurisdiction
over Aekyung exists. We conclude that it does.
II. Purposeful Availment
We first consider whether Aekyung purposefully availed
itself of the privilege of doing business in California. Given the
evidence of Aekyung’s direct sales of its consumer products to
distributors based in California, including Jayone, we conclude
that Jayone has established purposeful availment.
“‘“The purposeful availment inquiry . . . focuses on the
defendant’s intentionality. [Citation.] This prong is only
satisfied when the defendant purposefully and voluntarily directs
[its] activities toward the forum so that [it] should expect, by
virtue of the benefit [it] receives, to be subject to the court’s
jurisdiction based on” [its] contacts with the forum.’ [Citation.]
Thus, purposeful availment occurs where a nonresident
defendant ‘“purposefully direct[s]” [its] activities at residents of
the forum’ [citation], ‘“purposefully derive[s] benefit” from’ its
activities in the forum [citation], ‘create[s] a “substantial
11
connection” with the forum’ [citation], ‘“deliberately” has engaged
in significant activities within’ the forum [citation], or ‘has
created “continuing obligations” between [itself] and residents of
the forum’ [citation]. By limiting the scope of a forum’s
jurisdiction in this manner, the ‘“purposeful availment”
requirement ensures that a defendant will not be haled into a
jurisdiction solely as a result of “random,” “fortuitous,” or
“attenuated” contacts. . . .’ [Citation.] Instead, the defendant will
only be subject to personal jurisdiction if ‘“it has clear notice that
it is subject to suit there, and can act to alleviate the risk of
burdensome litigation by procuring insurance, passing the
expected costs on to customers, or, if the risks are too great,
severing its connection with the state.”’ [Citation.]” (Snowney,
supra, 35 Cal.4th at pp. 1062-1063.)
In Secrest Machine Corp. v. Superior Court (1983) 33 Cal.3d
664 (Secrest), an injured employee brought a products liability
action in California against the Virginia manufacturer of a
machine that was used at his employer’s California factory. The
manufacturer did not maintain any offices, or have any agents,
representatives, employees, or property in California. (Id. at
p. 667.) The employer had heard about the manufacturer
through word of mouth, sent a representative to view similar
machines in operation at another company’s plant in California,
and then sent the same individual to Virginia to negotiate the
purchase of the machine. (Ibid.) After the Virginia visit, the
employer continued negotiations from California by both phone
and mail, and upon reaching an agreement, mailed a purchase
order for the machine at a price of $115,116. (Id. at pp. 667-668.)
The employer took delivery of the machine in Virginia, although
the parties’ contract conditioned acceptance on satisfactory
12
performance in California. (Id. at p. 168) The parties did not
have a formal maintenance agreement, but the manufacturer
provided such assistance on request. (Ibid.) The manufacturer
twice sent advertisements to the employer following the sale of
the machine. (Ibid.)
The California Supreme Court in Secrest concluded that the
manufacturer purposefully had availed itself of the California
forum by engaging in a direct sale of a product to a California
business for use in California. (Secrest, supra, 33 Cal.3d at
pp. 670-672.) The Court explained that the manufacturer’s
actions, including those that occurred outside of California, “were
designed to consummate a business arrangement in which [the
manufacturer] would profit financially by selling its product for
use in California. Although [the employer] initially approached
[the manufacturer], the sale was a deliberate act by [the
manufacturer] which generated substantial gross income and
constituted economic activity within California ‘as a matter of
commercial actuality.’” (Id. at p. 671.) The Court also noted that
the manufacturer’s contacts with California did not cease with
the installation of the machine at the employer’s business; rather,
the manufacturer continued to provide service assistance and
sent advertisements to the employer. (Ibid.) Therefore, “the sale
of the machine to [the employer] was not ‘simply an isolated
occurrence’ but involved ‘efforts of the manufacturer . . . to serve,
. . . the market for its product’ in California and should have
caused [the manufacturer] to anticipate being haled into a
California court to defend an action arising from an alleged defect
in its product. [Citation.]” (Ibid., fn. omitted.)
Relying on Secrest, the Court of Appeal in Luberski, Inc.
v. Oleificio F.LLI Amato S.R.L. (2009) 171 Cal.App.4th 40913
(Luberski) concluded that an Italian company that entered into a
direct sales contract with a California business purposefully had
availed itself of the California forum. The plaintiff, a California
company, filed a breach of contract action against the defendant,
an Italian olive oil producer, after the defendant failed to ship
12,000 cases of olive oil purchased by the plaintiff for $406,000.
(Id. at p. 412.) The defendant had no employees, assets, bank
accounts, or offices in California. (Id. at p. 413.) Although the
defendant had sold olive oil to a small number of California
customers, it provided no services in California; rather, its sales
activity solely consisted of accepting purchase orders, preparing
invoices, and then shipping the products to the closest harbor in
California. (Ibid.) The plaintiff’s unsolicited purchase order was
the parties’ first and only business dealing. (Ibid.)
In concluding the defendant was subject to specific personal
jurisdiction in California, the Court of Appeal in Luberski noted
that the parties’ “contract negotiations were conducted via long-
distance communications with the implicit understanding that
the goods were only useful to [the plaintiff] if they were delivered
to California.” (Luberski, supra, 171 Cal.App.4th at p. 419.) The
defendant also “maintained responsibility for the goods until they
arrived in California,” and thus, “had the expectation that the
goods it was placing in interstate commerce would be utilized in
California.” (Ibid.) The court reasoned: “This is not a case of
California tourists bringing olive oil home from Italy, or a third
party distributor shipping [the defendant’s] olive oil to California
without the specific knowledge of [the defendant]. [The
defendant] received the purchase order and was presented
with the option of completing a substantial transaction with a
California entity in California, which required delivery of goods
14
to California. [The defendant] opted to accept this order. The
totality of facts supports a finding that [the defendant]
purposefully availed itself of the benefits of the forum.” (Ibid.)
In reaching its holding, the Luberski court distinguished
the decision in Carretti v. Italpast (2002) 101 Cal.App.4th 1236(Carretti). In Carretti, a California restaurant employee sued a
California distributor, Carretti, who had sold to his employer a
pasta-making machine that severely injured the employee’s arm.
Carretti cross-complained against Italpast, an Italian company
that sold the machine to Carretti in Italy. (Id. at pp. 1239-1240.)
Italpast had no offices or employees in the United States, and did
not market or advertise its products in the United States. (Id. at
p. 1240.) Italpast never sold goods directly to California users,
and Carretti was the only California distributor who purchased
its products. (Ibid.) At the time of the lawsuit, Carretti had been
doing business with Italpast for seven years, and he traveled to
Italy on a regular basis to purchase pasta machines and other
products. (Ibid.) For each purchase, Italpast delivered the goods
to an Italian shipper selected by Carretti, and Carretti arranged
for shipment to California. (Ibid.) Carretti then resold Italpast
products in the United States and other countries. (Ibid.)
The Court of Appeal in Carretti concluded that Italpast had
not purposefully availed itself of the California forum because the
evidence failed to show that “Italpast, having placed its products
into the stream of commerce in Italy, either intended to serve the
California market or was aware its product was being marketed
in the forum.” (Carretti, supra, 101 Cal.App.4th at p. 1239.) The
court noted that Italpast had “not cultivated the California sales
market by repeatedly sending merchandise to various California
distributors.” (Id. at p. 1253.) Instead, Italpast engaged in
15
“random sales in Italy to a distributor who happens to have an
office in California but may resell its products anywhere.” (Ibid.)
As the court explained: “We do not construe this as an effort on
Italpast’s part to serve the California market. It was serving the
purchaser who arrived to do business with it in Italy. True
enough, it may have been foreseeable that the machines could
wind up in California, inasmuch as [Carretti] happened to have
an office in California. But this is not the same as saying Italpast
had or should have had an expectation that the products would be
sold to California consumers.” (Id. at pp. 1246-1247.)
In this case, we conclude that Jayone met its burden of
demonstrating that Aekyung purposefully availed itself of the
benefits of doing business in California. The undisputed facts
show that, between 2005 and 2012, Aekyung engaged in a
number of direct sales transactions with multiple California
distributors of its consumer products. One of those California
distributors was Jayone. According to Kim, Jayone’s Senior
Director, Jayone had an ongoing business relationship with
Aekyung between 2006 and 2010. During that period, Aekyung
sold to Jayone thousands of units of its products, including 3,600
bottles of the Aekyung Humidifier Mate. All products sold by
Aekyung were shipped to Jayone in California through the Ports
of Los Angeles or Long Beach. At the time Aekyung made these
sales, Aekyung was aware that Jayone’s business was located in
California, and that the products were being shipped to Jayone at
a California address. Indeed, the invoices that Aekyung prepared
for the two shipments of the Humidifier Mate to Jayone in 2006
and 2007 listed Jayone’s Paramount, California business address
and identified Los Angeles as the final destination for the goods.
16
The evidence also shows that, between 2006 and 2010,
Aekyung and Jayone had regular communications about their
business relationship. As described by Kim, representatives from
Aekyung and Jayone communicated with each other on a regular
basis by telephone, email, and purchase orders. In September
2006, Aekyung representatives, including Milky Kim (who was
responsible for overseeing Aekyung’s United States market),
visited Jayone’s facility in California to discuss increasing the
volume of Aekyung’s exports to Jayone. During that trip, Jayone
took the Aekyung representatives to a Los Angeles retail store
where Aekyung products were sold so that the representatives
could observe the placement of the products inside the store as
well as the store’s clientele. Thus, as of September 2006, the
Aekyung representatives who visited that Los Angeles retail
store would have known the company’s products were being sold
to consumers in California.
In addition, Jayone presented evidence that, between
2005 and 2012, Aekyung directly sold products other than the
Humidifier Mate to at least five different distributors located in
California. While Aekyung did not know the intended final
destination for the goods sold to these distributors, it understood
that each of the distributors had a California shipping address.
Aekyung’s direct sales to California businesses generated $1.78
million in revenue for the company between 2005 and 2012,
which accounted for more than half of Aekyung’s total revenue
for products sold to the United States. Thus, unlike the Italian
company in Carretti, which sold its products to a single California
distributor who traveled to Italy, Aekyung made direct efforts to
serve a California market by repeatedly selling and shipping its
consumer products to multiple distributors in California.
17
Citing the United States Supreme Court’s decision in
Bristol-Myers Squibb Co. v. Superior Court (2017) 582 U.S. ___,
137 S.Ct. 1773, 1781 (Bristol-Myers), Aekyung argues that its
sales of products other than the Humidifier Mate cannot support
a finding of purposeful availment because “contacts with the
forum state that are ‘unrelated to’ the accused product are ‘not
relevant’ to the specific jurisdictional inquiry.” Aekyung’s
reliance on this language in Bristol-Myers to support its
argument is misplaced. In claiming that its two Humidifier Mate
shipments to Jayone are the only relevant contacts for
determining whether it personally availed itself of the California
forum, Aekyung is conflating the first and second prongs of the
specific jurisdiction inquiry. The first prong concerns purposeful
availment, and whether the nonresident defendant purposefully
directed its activities toward California such that it should
expect, by virtue of the benefit it receives, to be subject to the
jurisdiction of California courts. (Snowney, supra, 35 Cal.4th at
pp. 1062-1063.) The second prong concerns relationship and
whether the lawsuit at issue is related to or arises out of the
defendant’s contacts with California. (Id. at pp. 1067-1068.)
Bristol-Myers solely addressed the relatedness prong. As
the high court explained: “In order for a state court to exercise
specific jurisdiction, ‘the suit’ must ‘aris[e] out of or relat[e] to
the defendant’s contacts with the forum.’ [Citations.] In other
words, there must be ‘an affiliation between the forum and the
underlying controversy, principally, [an] activity or an occurrence
that takes place in the forum State and is therefore subject to
the State’s regulation.’ [Citation.] For this reason, ‘specific
jurisdiction is confined to adjudication of issues deriving from,
or connected with, the very controversy that establishes
18
jurisdiction.’ [Citation.]” (Bristol-Myers, supra, 137 S.Ct. at
p. 1780.) “When there is no such connection, specific jurisdiction
is lacking regardless of the extent of a defendant’s unconnected
activities in the State. [Citation.]” (Id. at p. 1781.) Accordingly,
under Bristol-Myers, Aekyung’s sales of products unconnected to
the Humidifier Mate are not relevant to determining whether the
action is related to Aekyung’s contacts with California. However,
the nature and quality of Aekyung’s California sales activities
may be considered in deciding whether the company purposefully
availed itself of the privilege of doing business in the State. (See
Snowney, supra, 35 Cal.4th at p. 1063 [“purposeful availment
occurs where a nonresident defendant ‘“purposefully direct[s]”
[its] activities at residents of the forum’ . . ., ‘“purposefully
derive[s] benefit” from’ its activities in the forum . . ., [or]
‘“deliberately” has engaged in significant activities within’
the forum”]; Greenwell v. Auto-Owners Ins. Co. (2015) 233
Cal.App.4th 783, 795 [while the specific jurisdiction relatedness
prong focuses on the controversy at issue, “the “purposeful
availment” prong . . . focuses on the nature and quality of the
defendant’s activities in the state or with state residents”].)
Aekyung also contends that the evidence cannot support a
finding of purposeful availment because it never made a direct
effort to serve any market for its products in California, and did
not know whether the bottles of the Humidifier Mate that it sold
to Jayone would be resold to any California consumers. If the
scope of Aekyung’s direct sales to California businesses had been
limited to the two Humidifier Mate shipments it made to Jayone
in April 2006 and January 2007, then this argument might have
merit. In the products liability context, merely placing a product
into the stream of commerce, even with knowledge that the
19
product might enter the forum state, is not a sufficient basis for
personal jurisdiction over a nonresident defendant. (J. McIntyre
Machinery, Ltd. v. Nicastro (2011) 564 U.S. 873, 885-886
(plurality opinion); see also Bombardier Recreational Products,
Inc. v. Dow Chemical Canada ULC (2013) 216 Cal.App.4th 591,
602 [“inquiry into a foreign defendant’s purposeful availment . . .
must find more than merely entering a product into the stream of
commerce with knowledge the product might enter the forum
state”].) On the other hand, “if the sale of a product of a
manufacturer or distributor . . . is not simply an isolated
occurrence, but arises from the efforts of the manufacturer or
distributor to serve, directly or indirectly, the market for its
product in other States, it is not unreasonable to subject it to suit
in one of those States if its allegedly defective merchandise has
there been the source of injury to its owner or to others.” (World-
Wide Volkswagen Corp. v. Woodson (1980) 444 U. S. 286, 297.)
The evidence in this case demonstrates that Aekyung did
not merely place its products into the stream of commerce with
an awareness that they might end up in California. Rather,
Aekyung purposefully directed its activities toward California
businesses when it repeatedly sold its products to various
California distributors over a seven-year period. Aekyung also
purposefully derived benefits from its activities in California
when it generated almost $2 million in revenue from these
California sales. In so doing, Aekyung purposefully availed itself
of the benefits of doing business in California and reasonably
could expect to be subject to the jurisdiction of California courts.
20
III. Relatedness to Current Controversy
We next consider the second prong of the specific
jurisdiction inquiry, and whether the controversy at issue is
related to or arises out of Aekyung’s contacts with California.
The trial court concluded that Jayone failed to satisfy this prong
because it did not demonstrate that An purchased or used the
bottles of the Humidifier Mate that Aekyung shipped to Jayone
in April 2006 and January 2007. We conclude that the trial court
applied the relatedness prong too narrowly, and that Jayone met
its burden of showing that Plaintiffs’ wrongful death action is
related to or arises out of Aekyung’s sale of the Humidifier Mate.
In Vons, supra, 14 Cal.4th 434, the California Supreme
Court explained that the second prong of the specific jurisdiction
inquiry is satisfied if “there is a substantial nexus or connection
between the defendant’s forum activities and the plaintiff’s
claim.” (Id. at p. 456.) “A claim need not arise directly from the
defendant’s forum contacts in order to be sufficiently related to
the contact to warrant the exercise of specific jurisdiction.
Rather, as long as the claim bears a substantial connection to the
nonresident’s forum contacts, the exercise of specific jurisdiction
is appropriate.” (Id. at p. 452.) Moreover, “the defendant’s forum
activities need not be directed at the plaintiff in order to give rise
to specific jurisdiction.” (Id. at p. 457.) “[T]he nexus required to
establish specific jurisdiction is between the defendant, the
forum, and the litigation [citations] – not between the plaintiff
and the defendant.” (Id. at p. 458.) “‘“Only when the operative
facts of the controversy are not related to the defendant’s contact
with the state can it be said that the cause of action does not
arise from that [contact].”’ [Citation.]” (Id. at p. 455; accord,
Snowney, supra, 35 Cal.4th at p. 1068.)
21
Here, the undisputed evidence demonstrates that the
claims alleged in the Plaintiffs’ wrongful death action have a
substantial nexus to Aekyung’s sale of its Humidifier Mate to
Jayone in California. In their complaint, Plaintiffs allege that
An purchased the Aekyung Humidifier Mate from Kim’s Home
Center in Los Angeles “[c]ontinuously between 2006 and 2012,”
and that she used the product on a “daily or semi-daily basis in
the winter months and less frequently during the summer
months.” Plaintiffs also allege that the Aekyung Humidifier
Mate “contained toxic chemicals,” and that An’s “long term and
frequent use of the product” caused her to develop idiopathic
pulmonary fibrosis and respiratory depression, which resulted in
her death. In opposing Aekyung’s motion to quash, Jayone
presented evidence that it directly purchased from Aekyung 200
boxes of the Humidifier Mate in April 2006, and another 100
boxes of the Humidifier Mate in January 2007. All products were
shipped to Jayone at the Port of Los Angeles. Jayone also
presented evidence that it sold 55 boxes of the Humidifier Mate
to Kim’s Home Center in Los Angeles between 2006 and 2007.
Those sales occurred in December 2006, October 2007, and
November 2007. The Humidifier Mate products that Jayone sold
to Kim’s Home Center included product that Jayone purchased
from Aekyung in April 2006 and January 2007. Accordingly, the
record shows that, between 2006 and 2007, (1) An allegedly
purchased the Aekyung Humidifier Mate directly from Kim’s
Home Center; (2) Kim’s Home Center purchased 660 bottles of
the Humidifier Mate directly from Jayone; and (3) Jayone
purchased 3,600 bottles of the Humidifier Mate directly from
Aekyung. These California sales involving the Aekyung
22
Humidifier Mate substantially connect Plaintiffs’ claims to
Aekyung’s contacts with the State.
In finding that Jayone had failed to satisfy the relatedness
prong, the trial court focused on whether there was a direct link
between Aekyung and An, which would prove that the specific
bottles of the Aekyung Humidifier Mate that An purchased from
Kim’s Home Center were the same ones that Aekyung sold to
Jayone. The trial court thus applied a causation requirement to
the relatedness prong of the specific jurisdiction inquiry. The
California Supreme Court has made clear, however, that neither
a “proximate cause” test nor a “but for” test is the proper
standard for evaluating whether a cause of action is sufficiently
related to a defendant’s forum contacts to warrant the exercise of
jurisdiction. (Snowney, supra, 35 Cal.4th at p. 1068; Vons, supra,14 Cal.4th at pp. 462-464, 467-469.) As the Vons court explained:
“To require that the injury be proximately caused by the forum
contact is to require that the injury ‘arise out of’ the forum
contact in the strictest sense. Such a requirement is inconsistent
with the formulation that appears in [United States Supreme
Court precedent], which . . . states in the disjunctive that
jurisdiction is proper when litigation results from alleged injuries
that ‘“arise out of or relate to”’ forum activities. [Citations.]”
(Vons, supra, at p. 462.) The Vons court likewise rejected a “but
for” causation standard, reasoning that the “‘but for’ test is overly
mechanical and fails to concentrate on the central issue
presented by a motion to quash for lack of specific jurisdiction –
that is, whether the defendant’s forum contacts and the plaintiff’s
claim are related sufficiently so that it is fair to subject the
defendant to jurisdiction in the forum.” (Id. at pp. 468-469.)
23
Therefore, for purposes of the relatedness prong, Jayone
was not required to prove that the bottles of the Humidifier Mate
that it purchased directly from Aekyung in 2006 and 2007 in fact
ended up in the hands of An. To impose such a strict causation
requirement in the specific jurisdiction context would be contrary
to Vons and its progeny. Rather, to satisfy the jurisdictional
requirement that Plaintiffs’ claims arise out of or relate to
Aekyung’s forum contacts, it was sufficient for Jayone to show
that, within the time period covering An’s alleged injuries,
Jayone sold bottles of the Humidifier Mate that Aekyung had
shipped to Jayone in California to Kim’s Home Center in Los
Angeles. The undisputed facts establish that Jayone met its
burden here. (See Cassiar Mining Corp. v. Superior Court (1998)
66 Cal.App.4th 550, 553 [to prove relatedness prong of specific
jurisdiction, plaintiffs in California asbestos litigation did not
have to show nonresident defendant sold asbestos fiber to specific
jobsites where plaintiffs worked; it was sufficient that “litigation
result[ed] from injuries ‘related to’ [defendant’s] forum activities
of selling asbestos to certain companies located in California”].)
In arguing that the relatedness prong is not satisfied in
this case, Aekyung relies on the statement in Bristol-Myers that
“[t]he bare fact that [the nonresident defendant] contracted with
a California distributor is not enough to establish personal
jurisdiction in the State.” (Bristol-Myers, supra, 137 S.Ct. at
p. 1783.) Aekyung contends that the fact that it twice sold the
Humidifier Mate to Jayone is insufficient to establish specific
jurisdiction in the absence of evidence showing how or by whom
the particular bottles purchased by An were distributed to the
retail store that sold them to her. This contention lacks merit.
24
In Bristol-Meyers, more than 600 plaintiffs, most of whom
were not California residents, filed an action in California
against Bristol-Myers Squibb Company (BMS), asserting
products liability claims based on injuries allegedly caused by
BMS’s Plavix drug. (Bristol-Myers, supra, 137 S.Ct. at p. 1777.)
BMS was not a California corporation, and it did not design,
develop, or manufacture Plavix in California. (Id. at pp. 1777-
1778.) It did, however, contract with a California company,
McKesson, to distribute Plavix nationally. (Id. at p. 1783.)
BMS also engaged in other business activities in the State. Five
of its research and laboratory facilities were located in California.
(Id. at p. 1778.) In addition, BMS employed about 250 sales
representatives in California and maintained a small state-
government advocacy office in Sacramento. (Ibid.)
Asserting a lack of personal jurisdiction, BMS moved
to quash service of summons as to the claims alleged by the
nonresidents. (Bristol-Myers, supra, 137 S.Ct. at p. 1778.) The
California Supreme Court held that BMS’s extensive contacts
with California permitted the exercise of specific jurisdiction
over the nonresidents’ claims. (Id. at p. 1779.) The United States
Supreme Court reversed, holding that California lacked specific
jurisdiction to entertain the nonresidents’ claims because there
was no adequate link between those claims and the California
forum. (Bristol-Myers, supra, 137 S.Ct. at pp. 1781-1782.) The
high court rejected California’s “sliding-scale approach” to specific
jurisdiction under which “the strength of the requisite connection
between the forum and the specific claims at issue is relaxed if
the defendant has extensive forum contacts that are unrelated to
those claims.” (Id. at p. 1781.) The court explained that, “[f]or
specific jurisdiction, a defendant’s general connections with the
25
forum are not enough.” (Ibid.) Instead, “[w]hat is needed . . . is a
connection between the forum and the specific claims at issue.”
(Ibid.) Turning to the facts of the case, the court noted that “the
nonresidents were not prescribed Plavix in California, did not
purchase Plavix in California, did not ingest Plavix in California,
and were not injured by Plavix in California.” (Ibid.) The
nonresidents’ claims thus “involve[d] no harm in California
and no harm to California residents.” (Id. at p. 1782.)
In response to the nonresidents’ argument that BMS’s
decision to contract with California-based McKesson to distribute
Plavix nationally provided a sufficient basis for jurisdiction, the
Bristol-Myers court stated: “In this case, it is not alleged that
BMS engaged in relevant acts together with McKesson in
California. Nor is it alleged that BMS is derivatively liable for
McKesson’s conduct in California. And the nonresidents ‘have
adduced no evidence to show how or by whom the Plavix they
took was distributed to the pharmacies that dispensed it to them.’
[Citations.] The bare fact that BMS contracted with a California
distributor is not enough to establish personal jurisdiction in the
State.” (Bristol-Myers, supra, 137 S.Ct. at p. 1783.)
The facts in this case are significantly different from those
in Bristol-Myers. Here, Plaintiffs are California residents
alleging claims on behalf of their deceased mother, An, who was
also a California resident. Plaintiffs allege that An purchased
the Aekyung Humidifier Mate in California, used the product in
California, and was harmed by the product in California. It is
undisputed that the 300 boxes of Humidifier Mate that Aekyung
sold directly to Jayone in 2006 and 2007 were shipped to the Port
of Los Angeles in California, and that Aekyung’s own invoices
identified Los Angeles as the final destination for the goods. It
26
is also undisputed that Jayone sold a portion of the Humidifier
Mate product that it purchased from Aekyung to Kim’s Home
Center in Los Angeles, which was the retail store where An
allegedly bought the product on a continuous basis from 2006
to 2012.
Accordingly, this is not a case where it is merely shown
that a nonresident defendant contracted with a California
distributor to sell its product, and the evidence otherwise fails
to establish how or by whom the product was distributed to the
business that ultimately sold it to the plaintiff. Rather, this is a
case where the plaintiffs have presented evidence showing that a
nonresident defendant contracted with a California distributor to
ship its product to California, and the California distributor in
turn sold the product to a California store, where the plaintiffs’
mother, a California resident, repeatedly purchased the product.
Hence, unlike the nonresidents’ claims in Bristol-Myers, the
claims alleged in this case specifically involve harm in California
suffered by a California resident. On this record, Jayone has
established that Plaintiffs’ claims in this action are sufficiently
related to Aekyung’s contacts with California to warrant the
exercise of specific jurisdiction.
IV. Reasonableness
Having concluded that Jayone has satisfied its burden of
demonstrating facts justifying the exercise of specific jurisdiction,
we next consider whether Aekyung has shown that the assertion
of jurisdiction would be unfair or unreasonable. We conclude that
Aekyung has not made the requisite showing here.
In evaluating whether the exercise of specific jurisdiction
would comport with fair play and substantial justice, the “‘court
“must consider the burden on the defendant, the interests of the
27
forum State, and the plaintiff’s interest in obtaining relief. It
must also weigh in its determination ‘the interstate judicial
system’s interest in obtaining the most efficient resolution of
controversies; and the shared interest of the several States in
furthering fundamental substantive social policies.’”’ [Citation.]
‘Where . . . a defendant who purposefully has directed [its]
activities at forum residents seeks to defeat jurisdiction, [it] must
present a compelling case that the presence of some other
considerations would render jurisdiction unreasonable.’
[Citation.]” (Snowney, supra, 35 Cal.4th at p. 1070.) In the case
of a foreign company, “[t]he unique burdens placed upon one
who must defend oneself in a foreign legal system should have
significant weight in assessing the reasonableness of stretching
the long arm of personal jurisdiction over national borders.”
(Asahi Metal Industry Co. v. Superior Court (1987) 480 U.S.
102, 114.) However, “[w]hen minimum contacts have been
established, often the interests of the plaintiff and the forum in
the exercise of jurisdiction will justify even the serious burdens
placed on the alien defendant.” (Ibid.)
Aekyung contends that requiring a “Korean company with
zero presence in California . . . to appear in a forum on the other
side of the Pacific Ocean from its home would naturally “impose
‘serious burdens.’” Aekyung also claims that asserting
jurisdiction over it would be particularly unfair given that its
only relevant forum contacts were two isolated shipments of the
Humidifier Mate to Jayone over 10 years ago. We disagree.
Aekyung is a corporation with a global sales market. While the
burdens placed on a foreign company must be carefully weighed,
“‘modern advances in communications and transportation have
significantly reduced the burden of litigating in another
28
country.’” (Gilmore Bank v. AsiaTrust New Zealand Ltd. (2014)
223 Cal.App.4th 1558, 1575.) Additionally, contrary to Aekyung’s
characterization, the scope of its relevant contacts with California
is not limited to the two Humidifier Mate shipments that it made
to Jayone. As discussed, Aekyung engaged in numerous direct
sales of its consumer products to multiple California distributors
over a seven-year period, and generated almost $2 million in
sales revenue from these California business activities. Given
the strength of Aekyung’s contacts with California, the assertion
of specific jurisdiction in this case would not be unreasonable.
California also has “a substantial interest in providing a
forum in which a California resident may seek redress for
injuries sustained” in the State. (Secrest, supra, 33 Cal.3d at
p. 672; see Integral Development Corp. v. Weissenbach (2002) 99
Cal.App.4th 576, 591 [“California has a manifest interest in
providing a local forum for its residents to redress injuries
inflicted by out-of-state defendants”].) As previously noted,
Plaintiffs are California residents, and their mother, An, was a
California resident. It is alleged that An purchased and used the
Aekyung Humidifier Mate in California, was injured by the
product in California, and sought medical care for her injuries in
California. Jayone is a California corporation, and the two other
defendants named in Jayone’s cross-complaint—Kim’s Home
Center and Woosung—are also California corporations.
Aekyung nevertheless asserts that California’s interest in
the action is minimal because Jayone’s cross-complaint is solely
for indemnity, and “Plaintiffs are not even pressing claims
against Aekyung.” While it is true that Plaintiffs have not served
their complaint on Aekyung to date, they did name Aekyung as a
defendant in the complaint, and they allege that Aekyung
29
distributed the specific product that caused An’s death with the
knowledge that the product was defective. Irrespective of
whether any other Korean defendant named in Plaintiffs’
complaint may be subject to California’s personal jurisdiction,
the State still has a strong interest in adjudicating the present
controversy. Under these circumstances, Aekyung has failed to
make a compelling case that the assertion of jurisdiction would
be unreasonable or unfair. We therefore conclude that Aekyung
is subject to specific jurisdiction in California.
DISPOSITION
The order granting Aekyung’s motion to quash service of
summons is reversed and the court is directed to enter a new
order denying the motion. Jayone shall recover its costs on
appeal.
ZELON, J.
We concur:
PERLUSS, P. J.
SEGAL, J.
30